NAIROBI, Kenya Jun 19 – The National Assembly’s Committee on Delegated Legislation has expressed concern that proposed regulations governing stablecoins could stifle innovation, weaken Kenya’s position as a regional financial technology leader, and drive investment to competing jurisdictions.
During a consultative meeting with representatives from the virtual assets industry, the Committee, chaired by Samuel Chepkonga (Ainabkoi), questioned several provisions contained in the National Treasury’s draft regulations, arguing that some proposals appear disconnected from global industry practices and the technical realities of digital assets.
Committee members warned that poorly designed regulations could undermine Kenya’s ambition to become a leading digital finance hub in Africa. Speaking during the session,
“If we make laws that are in one hole here and have no relation with the global practice, then we will be a laughing stock to the entire world,” he said.
A major point of concern was a proposal requiring stablecoin issuers to maintain 30 percent of their reserves in local banks. Legislators questioned whether the requirement would provide meaningful protection to investors while raising concerns that it could amount to regulatory duplication and discourage international operators from entering the Kenyan market.
Mathare MP Anthony Olouch sought clarification on the rationale behind the reserve requirement, particularly in cases involving foreign issuers.
“What’s the purpose of the reserve? Is it not to protect the person within the Kenyan jurisdiction against a foreigner?” he posed, questioning how the provision would safeguard Kenyan investors if a foreign stablecoin issuer encountered financial difficulties.
The Committee also scrutinised provisions requiring stable-coins to be redeemable “at any time,” arguing that the wording is overly broad and could create uncertainty for consumers.
Kathiani MP Robert Mbui warned that the phrase could be interpreted in ways that disadvantage investors.
“At any time means when? Even next year is any time. If I refuse to redeem, I can tell you, ‘Redeem it next year,’ and next year still falls under ‘any time’,” he observed.
Committee Vice Chairperson Robert Githinji (Gichugu) urged the Committee to invite National Treasury officials back for further discussions, noting that the Ministry may have technical justifications for the contested provisions.
“As we engage industry players, we also need to call back Treasury to explain because they might have a more professional understanding in this area,” he said.
Recognising the highly technical nature of virtual assets and stablecoins, lawmakers proposed capacity-building initiatives, including sensitisation seminars and benchmarking visits to countries with mature digital asset regulatory frameworks.
